Our high local property taxes: how they hurt

Ken Hilton

We’re just emerging from the worst economic recession since the 1930s. Unemployment, “underwater mortgages” and property tax burdens took their toll on struggling homeowners throughout the nation. Sullivan County suffered more than most. Even today, years after hitting bottom, the New York State Labor Department finds 8.9% of Sullivan County’s workforce unemployed, a number higher than the state or national averages and much higher than the 6.5% rate reported just prior to the recession. While we don’t know the actual number of Sullivan County homes that were foreclosed by banks for non-payment of mortgages, it’s likely that our county was worse off than the state in general where the Center for Responsible Lending reported in 2011 that 9.8% of all homes were “seriously delinquent or in foreclosure.” Just this past year, in 2013, over 400 property parcels were seized by the county for non-payment of taxes. (Fortunately, most were empty lots or derelict buildings.) Additionally, the county has seen a spike in recent years in the number of homeowners asking to pay their property taxes in installments and in the number of homeowners who pay their taxes late, facing the specter of foreclosure. No doubt our high property taxes contribute to these grim data.

Though the exact numbers are uncertain, we know that people are leaving Sullivan County. In 2009, a study by the Manhattan Institute reported that between 2000 and 2008, 1.5 million New Yorkers moved to other states. This was the greatest population out-migration of all 50 states. Most headed south, with over 300,000 New Yorkers moving to Florida alone. But many others moved closer to home, with between 8,000 and 15,000 moving from New York to Pennsylvania each year. Why such a massive out-migration of New Yorkers? The Manhattan Institute’s study pointed to “New York’s state and local tax burden… among the heaviest in the country.” The comparisons are stark. New York’s total tax burden takes 13% of the income of the average resident; Pennsylvania’s takes 10.2%. In 2009, The Tax Foundation reported Sullivan County’s median property tax at $3,645. Just across the Delaware River in Wayne County, the median property tax was $1,929, about half as much. Is it any wonder that some of our neighbors are moving to Pennsylvania?

Unfortunately, even with one of the highest property tax burdens in the nation, our tax revenues seem inadequate. Our roads are in terrible shape and getting worse. Our towns, villages and county simply don’t have the resources needed to fill the potholes as quickly as they’re created. State and federal mandates exact such huge costs that the primary responsibilities of our local governments are being pushed aside. A good example is the Medicaid burden on Sullivan County, which requires the county to send $394,000 to Albany each week (more than $20 million annually). It’s only one of many onerous costs that our local officials have little control over, and that increasingly make it difficult to pay for the important services primary to the responsibilities of local government, like providing additional sheriff’s deputies. And with the state tax cap and stagnant state aid, local school districts annually find themselves facing cost increases, many beyond their control and far greater than new revenues can support. The likely result? After depleting their reserve funds, larger class sizes, program cuts and employee lay-offs. Education services for children—a school district’s primary responsibility—are being squeezed by the costs of pensions, health insurance and contract settlements.

What can we do? Is it possible to lessen our local tax burden without further harm to the local government services that we so greatly need? The next installment in this series of articles will examine proposals coming from Albany and recommendations from non-partisan studies. In the meantime, watch for the April 1 release of the New York State budget. It will include recommendations of its own.

[Ken Hilton is a former Sullivan West Central School District superintendent.]